Philippines. Rice shortage, price hike loom

The Foundation for Economic Freedom (FEF) is warning of “significant shortages” and “increased rice prices” in the country following President Duterte’s recent order to suspend rice importation.

In a statement issued yesterday, the FEF called on President Duterte to reverse his decision to stop all rice importation as the group cited its adverse effects on the country.

Agriculture Secretary Emmanuel Piñol last week said Duterte ordered him to stop the importation of rice to protect the country’s farmers.

“Stopping all rice importation is a dangerous policy that could lead to significant shortages and increased rice prices. The country is not self-sufficient in rice production. Stopping rice imports even during rice harvest season will put upward pressure on rice prices and lead to significant hikes, worsening hunger and poverty in the country,” the FEF said.

Rice self-sufficiency, the group said, is neither a desirable, nor a practical objective for the Philippines given its archipelagic nature and because it does not have vast lands and giant river systems like Vietnam and Thailand which enable them to plant and harvest rice several times a year.

“Instead, the Philippines should rely on international trade to guarantee food security, just as Malaysia and Singapore have done. Furthermore, the country can forge a rice security pact with fellow ASEAN members, such as Vietnam and Thailand, to guarantee rice supply in the Philippines in case of global shortage,” the FEF said.

The group pointed out that allowing only the National Food Authority (NFA) to import rice is the wrong policy, saying the “government is a poor judge of the timing of rice imports.”

“We believe that neither allowing the NFA to solely import rice, nor stopping all rice imports, is good for the Filipino consumer or the Filipino rice farmer,” the FEF said.

“Typhoons can hit the country at anytime and destroy rice crops. Neither is the government equipped to respond quickly to a rice shortage given its bureaucratic procedures. A delay in importing rice will lead to considerable spikes in rice prices and make rice more unaffordable to the poor,” the group said.

Instead of having the NFA maintain its monopoly on rice importation, the FEF urges the government to liberalize rice imports.

By doing so, the group said the government would not incur debt to finance the importation.

The FEF said decisions to import are best left to the market since it is in the interest of suppliers to import at the lowest possible price and in an amount that would not lead to an oversupply.

“We, thus, call on the Duterte administration to remove the NFA monopoly on rice importation and liberalize the rice trade. We support the tariffication of rice imports and the use of tariff revenues to help rice farmers to either shift production to higher-value crops or increase productivity,” the FEF said.

“We believe that rice import liberalization will lead to lower rice prices, lower consumer inflation, and higher disposable income for the working class. It will make manufacturing more competitive since rice, which is the single biggest source of calories for workers, will become more affordable,” it added.

The FEF, an advocacy organization for free market reforms, well-defined and secure property rights, consumer welfare and good governance, counts among its members former and present cabinet secretaries and undersecretaries, as well as those from the business and finance community.

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